Gold and silver prices moved lower in early trade on Friday, July 31, as investors booked profits after recent gains and a stronger US dollar put pressure on precious metals. Rising tensions between the US and Iran also added to market uncertainty, even as softer US inflation data offered some relief to bullion investors.
On the Multi Commodity Exchange (MCX), the most active gold futures contract fell 0.62%, or Rs 905, to Rs 1,43,935 per 10 grams. The contract had settled at Rs 1,44,840 in the previous session.
Silver futures were also under pressure. MCX silver declined 0.49%, or Rs 1,079, to Rs 2,18,888 per kg. It moved between Rs 2,18,538 and Rs 2,18,935 during early trade, compared with the previous close of Rs 2,19,967 per kg.
The fall came after a strong previous session for bullion. Gold and silver had gained after the US Federal Reserve kept interest rates unchanged on Wednesday. With prices rising sharply in the previous session, some investors chose to lock in gains, leading to profit-booking in the gold price today and silver markets.
The stronger US dollar added another layer of pressure. The dollar index rose around 0.40% on Friday, making dollar-denominated gold more expensive for investors holding other currencies. A stronger dollar generally weighs on global bullion demand because buyers using other currencies have to pay more for the same quantity of gold.
At the same time, geopolitical uncertainty remained high. The ongoing US-Iran conflict has kept investors cautious and pushed oil prices higher. Brent crude was trading near $88 a barrel on Friday morning, despite easing somewhat from recent levels.
Higher oil prices are important for gold investors because they can add to inflationary pressure. If energy costs remain elevated, markets may expect interest rates to stay higher for longer, which can reduce the appeal of non-yielding assets such as gold.
The US Federal Reserve’s latest decision has also created a mixed picture for the gold price forecast. The Fed kept its policy rate unchanged on July 29, but three members of its policy committee voted for a 25-basis-point rate increase. The dissent highlighted continuing concerns about inflation.
US inflation data, however, provided some support to the precious metals market. The Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, declined 0.1% month-on-month in June after rising 0.5% in May. On a year-on-year basis, the PCE index rose 3.7%.
The Consumer Price Index (CPI) also eased to 3.5% in June from 4.2% in May. Softer inflation could reduce pressure on the Federal Reserve to raise interest rates aggressively, which would normally be positive for gold. However, investors remain concerned that higher energy prices caused by the Middle East conflict could push inflation higher again.
Meanwhile, domestic gold rates in India remained largely stable despite the weakness in MCX futures. According to the latest retail rates, 24-carat gold was priced at Rs 14,434 per gram in Mumbai, Kolkata, Bengaluru, Hyderabad, Kerala and Pune. The 22-carat rate stood at Rs 13,231 per gram, while 18-carat gold was priced at Rs 10,826 per gram.
Delhi recorded slightly higher prices, with 24-carat gold at Rs 14,449 per gram, 22-carat gold at Rs 13,246 and 18-carat gold at Rs 10,841. Ahmedabad and Vadodara also reported marginally higher rates than several other major cities.
Chennai’s 24-carat and 22-carat rates were in line with the prices seen across several other cities, although its 18-carat gold rate was slightly higher at Rs 11,046 per gram. The small differences between cities are mainly linked to local taxes, demand and other market factors.
The contrasting movement between MCX gold prices and retail rates highlights how domestic jewellery prices do not always immediately mirror international or futures-market movements. Retail gold prices also reflect local costs, taxes, dealer margins and currency movements.
For traders, technical levels are now becoming important. Analysts cited by Mint see support for MCX gold around Rs 1,42,400 and Rs 1,41,750, while resistance is placed near Rs 1,44,000 and Rs 1,45,100. For silver, support levels are seen around Rs 2,17,700 and Rs 2,16,000, with resistance at Rs 2,22,200 and Rs 2,24,500.
Investors will now closely track the US dollar, Treasury yields, crude oil prices, geopolitical developments and upcoming economic data for fresh direction. The Fed’s interest-rate outlook will remain particularly important because expectations of lower rates tend to support gold, while higher-rate expectations can put pressure on it.